Here’s a Fresh Revenue Stream for Apple

Apple (NASDAQ:AAPL) will receive quarterly royalty payments from HTC as per details made public from their recent 10-year patent licensing agreement, though the financials were not revealed. The Taiwanese hardware manufacturer also agreed not to make “cloned” copies of Apple products with its newly acquired intellectual property, Bloomberg said.

What are the Key Details of the Agreement?

HTC will pay the fees, which will be based on sales volumes, 45 days after the end of each quarter and will be allowed to choose between two payment options. The amounts and payment choices were redacted from the 143-page document made public on Wednesday. Each side will license several patents to the other. While HTC will get access to some of Apple’s patented inventions, it will not get any rights to its design patents, copyrights, distinctive looks, trademarks, or know-how.

For instance, according to Bloomberg, while it will not be able to use the “slide to unlock” feature that Apple devices sport, it can use a different method such as a “bubble slider.” Functional methods, such as the pinch-to-zoom feature, “will not be considered a Distinctive Apple User Experience,” according to the contract and violations to that agreement may result in arbitration proceedings.

CHEET SHEAT Analysis: Catalysts to a Stock’s Movement

One of the core components of our CHEAT SHEET investing framework focuses on factors that affect a stock’s movement. Apple has been involved in several lawsuits against its Google (NASDAQ:GOOG) Android rivals, including Samsung. The 10-year deal with HTC, announced on November 11, ended all their mutual patent-infringement lawsuits. Agreements rather than court skirmishes are preferred by investors, because they offer stability and a steady flow of revenue and get rid of the possibility of sales injunctions.